Saturday, February 23, 2008

Solar panels for the home

The San Jose Mercury News recently reported that Severin Borenstein, a business school professor at UC Berkeley and the Director of the UC Energy Institute, says that:

Installing solar panels on homes is an economic "loser" with the costs far outweighing the financial benefit ...
The technology, using photovoltaic panels to generate electricity, is not economically competitive with fossil fuels and costs more than other renewable fuels

The solar industry, naturally, disagrees with Borenstein's conclusions. But I have to say that, based on the little research I've done, I have not been convinced about the financial utility of installing solar panels. In my mind, the primary benefit of installing solar panels appears to be the good feeling one gets from doing something about climate change. Borenstein explicitly notes that

...he didn't take into account the feel-good benefit or societal value of installing a solar system on your roof.

But is there a different way to get these benefits without incurring the financial costs of installing solar panels? I think there is.

Some utilities allow you to opt for "green energy" alternatives; for a small premium one can buy energy from renewable sources. For example, Palo Alto Green is a program that allows you to buy your electricity from renewable sources for a premium of only 1.5 cents per kWh. Currently, 97.5% of the this renewable energy is from wind and the remaining 2.5% from solar. (Of course, the actual energy delivered to your home isn't guaranteed to be from a renewable source, but the utility promises to buy the right amount of electricity from renewable sources based on the usage by subscribers to this program.)

We've been subscribers to this program for some time now. And based on Borenstein's analysis, I don't think I'm going to rush in to install solar panels on our roof. Rather, I'll let the utilities install large solar farms or other renewable energy sources, and get the "good feeling" by supporting their efforts. Presumably, the utilities will ensure that these renewable sources are cost effective.

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